Bonds Bonds are a kind of interest bearing notes payable, usually issued by companies, universities and governmental organizations. It is a debt instrument used for the purpose of raising fund of the corporations or governmental agencies. If selling price of the bond is equal to its face value, it is called as par on bond. If selling price of the bond is lesser than the face value, it is known as discount on bond. If selling price of the bond is greater than the face value, it is known as premium on bond. Effective interest rate of amortization bond Effective interest rate method of amortization is a process of amortizing premium on bond or discount on bond, which allocates the different amount of interest expense in each period of interest payment, but at a constant percentage rate. To Determine: The price of the bonds for Company N as on 1 st January 2016.

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Answer 1

Question

Chapter 14, Problem 14.10E

(1)

To determine

Bonds

Bonds are a kind of interest bearing notes payable, usually issued by companies, universities and governmental organizations. It is a debt instrument used for the purpose of raising fund of the corporations or governmental agencies. If selling price of the bond is equal to its face value, it is called as par on bond. If selling price of the bond is lesser than the face value, it is known as discount on bond. If selling price of the bond is greater than the face value, it is known as premium on bond.

Effective interest rate of amortization bond

Effective interest rate method of amortization is a process of amortizing premium on bond or discount on bond, which allocates the different amount of interest expense in each period of interest payment, but at a constant percentage rate.

To Determine: The price of the bonds for Company N as on 1^st January 2016.

(2)

To determine

To Prepare: The journal entry to record the issuance of the bonds for Company N as son 1^st January 2016.

(3)

To determine

To Prepare: The amortization schedule using effective interest rate method.

(4)

To determine

To Prepare: The journal entry to record interest on June 30, 2016.

(5)

To determine

To Prepare: The Journal entry to record the maturity as on 31^st December 2019.

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Answer 2

Question

Chapter 14, Problem 14.10E

(1)

To determine

Bonds

Bonds are a kind of interest bearing notes payable, usually issued by companies, universities and governmental organizations. It is a debt instrument used for the purpose of raising fund of the corporations or governmental agencies. If selling price of the bond is equal to its face value, it is called as par on bond. If selling price of the bond is lesser than the face value, it is known as discount on bond. If selling price of the bond is greater than the face value, it is known as premium on bond.

Effective interest rate of amortization bond

Effective interest rate method of amortization is a process of amortizing premium on bond or discount on bond, which allocates the different amount of interest expense in each period of interest payment, but at a constant percentage rate.

To Determine: The price of the bonds for Company N as on 1^st January 2016.

(2)

To determine

To Prepare: The journal entry to record the issuance of the bonds for Company N as son 1^st January 2016.

(3)

To determine

To Prepare: The amortization schedule using effective interest rate method.

(4)

To determine

To Prepare: The journal entry to record interest on June 30, 2016.

(5)

To determine

To Prepare: The Journal entry to record the maturity as on 31^st December 2019.

Expert Solution & Answer

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Check out a sample textbook solution

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Answer 3

Question

Chapter 14, Problem 14.10E

(1)

To determine

Bonds

Bonds are a kind of interest bearing notes payable, usually issued by companies, universities and governmental organizations. It is a debt instrument used for the purpose of raising fund of the corporations or governmental agencies. If selling price of the bond is equal to its face value, it is called as par on bond. If selling price of the bond is lesser than the face value, it is known as discount on bond. If selling price of the bond is greater than the face value, it is known as premium on bond.

Effective interest rate of amortization bond

Effective interest rate method of amortization is a process of amortizing premium on bond or discount on bond, which allocates the different amount of interest expense in each period of interest payment, but at a constant percentage rate.

To Determine: The price of the bonds for Company N as on 1^st January 2016.

(2)

To determine

To Prepare: The journal entry to record the issuance of the bonds for Company N as son 1^st January 2016.

(3)

To determine

To Prepare: The amortization schedule using effective interest rate method.

(4)

To determine

To Prepare: The journal entry to record interest on June 30, 2016.

(5)

To determine

To Prepare: The Journal entry to record the maturity as on 31^st December 2019.

Expert Solution & Answer

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Answer 4

Question

Chapter 14, Problem 14.10E

(1)

To determine

Bonds

Bonds are a kind of interest bearing notes payable, usually issued by companies, universities and governmental organizations. It is a debt instrument used for the purpose of raising fund of the corporations or governmental agencies. If selling price of the bond is equal to its face value, it is called as par on bond. If selling price of the bond is lesser than the face value, it is known as discount on bond. If selling price of the bond is greater than the face value, it is known as premium on bond.

Effective interest rate of amortization bond

Effective interest rate method of amortization is a process of amortizing premium on bond or discount on bond, which allocates the different amount of interest expense in each period of interest payment, but at a constant percentage rate.

To Determine: The price of the bonds for Company N as on 1^st January 2016.

(2)

To determine

To Prepare: The journal entry to record the issuance of the bonds for Company N as son 1^st January 2016.

(3)

To determine

To Prepare: The amortization schedule using effective interest rate method.

(4)

To determine

To Prepare: The journal entry to record interest on June 30, 2016.

(5)

To determine

To Prepare: The Journal entry to record the maturity as on 31^st December 2019.

Expert Solution & Answer

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Answer 5

Chapter 14, Problem 14.10E

(1)

To determine

Bonds

Bonds are a kind of interest bearing notes payable, usually issued by companies, universities and governmental organizations. It is a debt instrument used for the purpose of raising fund of the corporations or governmental agencies. If selling price of the bond is equal to its face value, it is called as par on bond. If selling price of the bond is lesser than the face value, it is known as discount on bond. If selling price of the bond is greater than the face value, it is known as premium on bond.

Effective interest rate of amortization bond

Effective interest rate method of amortization is a process of amortizing premium on bond or discount on bond, which allocates the different amount of interest expense in each period of interest payment, but at a constant percentage rate.

To Determine: The price of the bonds for Company N as on 1^st January 2016.

(2)

To determine

To Prepare: The journal entry to record the issuance of the bonds for Company N as son 1^st January 2016.

(3)

To determine

To Prepare: The amortization schedule using effective interest rate method.

(4)

To determine

To Prepare: The journal entry to record interest on June 30, 2016.

(5)

To determine

To Prepare: The Journal entry to record the maturity as on 31^st December 2019.

Answer 6

Chapter 14, Problem 14.10E

(1)

To determine

Bonds

Bonds are a kind of interest bearing notes payable, usually issued by companies, universities and governmental organizations. It is a debt instrument used for the purpose of raising fund of the corporations or governmental agencies. If selling price of the bond is equal to its face value, it is called as par on bond. If selling price of the bond is lesser than the face value, it is known as discount on bond. If selling price of the bond is greater than the face value, it is known as premium on bond.

Effective interest rate of amortization bond

Effective interest rate method of amortization is a process of amortizing premium on bond or discount on bond, which allocates the different amount of interest expense in each period of interest payment, but at a constant percentage rate.

To Determine: The price of the bonds for Company N as on 1^st January 2016.

Answer 7

Chapter 14, Problem 14.10E

(1)

To determine

Bonds

Bonds are a kind of interest bearing notes payable, usually issued by companies, universities and governmental organizations. It is a debt instrument used for the purpose of raising fund of the corporations or governmental agencies. If selling price of the bond is equal to its face value, it is called as par on bond. If selling price of the bond is lesser than the face value, it is known as discount on bond. If selling price of the bond is greater than the face value, it is known as premium on bond.

Effective interest rate of amortization bond

Effective interest rate method of amortization is a process of amortizing premium on bond or discount on bond, which allocates the different amount of interest expense in each period of interest payment, but at a constant percentage rate.

To Determine: The price of the bonds for Company N as on 1^st January 2016.

Answer 8

(2)

To determine

To Prepare: The journal entry to record the issuance of the bonds for Company N as son 1^st January 2016.

Answer 9

(2)

To determine

To Prepare: The journal entry to record the issuance of the bonds for Company N as son 1^st January 2016.

Answer 10

(3)

To determine

To Prepare: The amortization schedule using effective interest rate method.

Answer 11

(3)

To determine

To Prepare: The amortization schedule using effective interest rate method.

Answer 12

(4)

To determine

To Prepare: The journal entry to record interest on June 30, 2016.

Answer 13

(4)

To determine

To Prepare: The journal entry to record interest on June 30, 2016.

Answer 14

(5)

To determine

To Prepare: The Journal entry to record the maturity as on 31^st December 2019.

Answer 15

(5)

To determine

To Prepare: The Journal entry to record the maturity as on 31^st December 2019.

Answer 16

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Answer 17

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Answer 18

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Answer 19

Ch. 14 - How is periodic interest determined for...Ch. 14 - As a general rule, how should long-term...Ch. 14 - How are bonds and notes the same? How do they...Ch. 14 - What information is contained in a bond indenture?...Ch. 14 - Prob. 14.5Q Ch. 14 - How is the price determined for a bond (or bond...Ch. 14 - A zero-coupon bond pays no interest. Explain.Ch. 14 - Prob. 14.8Q Ch. 14 - Compare the two commonly used methods of...Ch. 14 - Prob. 14.10Q

To Prepare: The journal entry to record the issuance of the bonds for Company N as son 1st January 2016.

To Prepare: The amortization schedule using effective interest rate method.

To Prepare: The journal entry to record interest on June 30, 2016.

To Prepare: The Journal entry to record the maturity as on 31st December 2019.

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Chapter 14 Solutions

To Prepare: The journal entry to record the issuance of the bonds for Company N as son 1^st January 2016.

To Prepare: The Journal entry to record the maturity as on 31^st December 2019.